Sentry Insurance survey found that while 69% of U.S. executives believe a single multimillion-dollar verdict could shut down their company, only 17% list lawsuits among their biggest threats.
More than half of U.S. business leaders say they expect their companies to thrive in 2026, but that confidence masks a troubling gap between the risks executives worry about most and the ones capable of destroying their businesses in a single event, according to the 2026 C-Suite Stress Index, published by Sentry Insurance.
The survey of of 1,250 U.S. executives found that business leaders consistently underrate the threats posed by catastrophic lawsuits and natural disasters — even as nearly all have experienced both in recent years.
Supply chain challenges (45%), economic pressures (44%) and tariff uncertainty (39%) top the list of concerns executives cited for the year ahead, the report found. But lawsuits and natural catastrophes — each capable of putting a company out of business overnight — ranked far lower, at 17% and 32%, respectively.
Litigation Exposure Is Widespread but Underestimated
The disconnect on litigation risk is especially stark. Some 93% of executives said their companies had been impacted by lawsuits in the past five years, with nearly half reporting higher insurance premiums or rising legal costs as a direct result, according to the survey. Management distraction is also significant: 42% of executives said their leadership teams had been diverted to legal matters, a figure that climbs to 51% in the retail sector.
The threat of so-called nuclear verdicts looms large. Nearly seven in 10 executives (69%) said a single multimillion-dollar verdict would likely put their company out of business, with that concern rising to 76% among companies with annual revenue below $5 million, the report said. Regional variation is also notable — 73% of executives in the West said litigation and large verdicts are already a problem in their industry, compared with 59% in the Northeast.
Third-party litigation funding adds further pressure. Two-thirds of executives (66%) view it as a problem in their industry, with a quarter of those in long-haul trucking calling it “a massive and increasing threat,” according to the survey.
Weather Risks Are Familiar but Still Deprioritized
Natural catastrophes follow a similar pattern. Nearly all executives (92%) reported some form of severe weather disruption over the past five years, and half believe the next major event could end their company entirely, the report found. That concern is especially acute among smaller firms, where 63% of leaders at companies with 10 to 49 employees said a single event could be business-ending.
The operational toll is already substantial. Some 43% of executives said weather-related outages left their systems temporarily unable to operate, and 70% reported property damage to facilities, vehicles or equipment. Beyond direct losses, 84% of executives expressed concern that property insurance will become harder to obtain where they operate — a worry that is particularly intense in the western U.S., where nearly half are very or extremely concerned about future availability, according to the survey.
Workforce Pressures Compound the Risk Picture
Workforce challenges are amplifying exposure across industries. Some 84% of executives said they are asking employees to perform tasks outside their roles or above their training level, and 51% reported requiring longer hours or fewer breaks, the report found. Two-thirds of executives have either already seen an influx of unskilled or under-skilled workers lead to more workers’ compensation claims or are concerned it will happen soon.
The health care sector faces especially pronounced strain. Nearly two-thirds of health care leaders (63%) said the additional demands being placed on workers — including longer hours — could lead to more injuries, compared with 51% across all industries, according to the survey.
In response, 83% of executives plan to increase investment in worker safety this year, citing goals such as improved retention (51%), higher operational output (48%) and easier recruitment (47%). Nearly all leaders (98%) also plan to reevaluate their insurance policies in 2026, with 43% looking to purchase additional coverage and 39% aiming to eliminate existing gaps.
Only 17% of executives said they are completely confident their insurance coverage is adequate — a figure the report characterized not as alarming but as a sign that leaders recognize the need to keep their policies aligned with evolving risks, the report said.
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